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At the same time, the cost of living and doing business is soaring. The headline inflation rate is hovering near 5 percent, vs. 3.3 percent for the euro zone as a whole. And the euro’s rise against the dollar and the pound sterling has made Ireland much less competitive in its two main export markets. That, in turn, has led many manufacturers, both Irish and foreign, to eliminate local positions. Over the last year, big multinationals such as Pfizer, Procter & Gamble, Motorola, Vodafone, and Allergan have cut scores of Irish jobs. Irish unemployment topped 5.2 percent in February, up from 4.5 percent a year ago.

The upshot, says Jim Power, chief economist at the Dublin-based financial-services group Friends First, is that Ireland’s global competitiveness has markedly deteriorated. That’s a view also shared by the European Central Bank, which recently issued a report showing that for the second year in a row, Ireland suffered the biggest decline in competitiveness of the 15 countries in the euro zone.

Multinationals Pull Back

Now Power and others fear that Ireland’s decline, coupled with increased competition from lower-cost, emerging markets, is threatening the very foreign direct investment that made its economy so successful in the past two decades. The country hosts nearly 1,000 foreign multinational companies that employ more than 150,000 workers. Led by technology giants such as Intel and Microsoft and pharmaceutical firms such as Wyeth and Amgen, these companies were attracted by Ireland’s low, 12.5 percent corporate tax rate, skilled workforce, and business-friendly environment.

There are already signs that the pace of foreign investment is slowing. A recent report from consultancy OCO Global showed that the amount of direct foreign investment into Ireland fell by 5 percent last year, to $2 billion. At the same time, the number of Irish jobs created as a result of foreign direct investment fell by 40 percent. Case in point: Last October, Amgen, the world’s biggest biotech company, announced it was shelving plans to build a billion-dollar manufacturing plant in County Cork.